Sustainability in Financial Advice: Boost for Green Investments?

Die EU Commission wants to steer more money into “green” investments. From August 2nd, things will get serious for banks and asset managers: From then on, when providing investment advice, they will have to ask about the advantages of their customers when it comes to sustainability.

Why is?

Regardless of whether it is an investment fund, share or annuity product – from August 2, bank advisors and insurance brokers are obliged to ask customers whether they want to invest “green” and what their preferences are. This must then be taken into account when selecting the product. The regulation is part of a whole series of new EU regulations that are gradually coming into force under the abbreviation “Mifid II”. In the future, investment advice will no longer just be about return opportunities and risk, but also about the environment, social issues and good corporate governance: the abbreviation IT G (Environmental Social Governance) is finding its way into consulting to a certain extent.

Are there uniform rules for green investments?

With the taxonomy, the EU Commission in Brussels has launched a kind of catalog for climate-friendly investments. Criticism is that from January 2023 onwards it is also considered climate-friendly to invest money in certain gas and nuclear power plants. Environmentalists, among others, find this wrong. Investors must therefore continue to find out very well what is behind financial products that are marketed as “sustainable”.

“The implementation of the Mifid II requirements is crazy for consultants,” says Christian Klein, who researches the topic of sustainable finance as a professor at the University of Kassel. “One problem is: how can you explain to a customer in a short time what, for example, taxonomy and disclosure regulations are? The main problem then is the so-called mapping: How does a consultant find the right products that the customer then buys?”

When asked, the BVI fund association explained: “The fact that there is still no uniform understanding of what is sustainable, despite countless technical details and regulations, is actually a problem.” In the opinion of the BVI, only European or international minimum standards can create more clarity: “That applies to ESG data, corporate reporting and requirements for sustainable products alike. That is why we are committed to such international minimum standards.”

Source link